Online vacation rentals in Marin a lucrative business

Heading into the holiday season last December, Teri Vereb figured that since she was going to be out of town on vacation, it might be worthwhile to try renting out the studio apartment behind her Novato home.

So she placed an ad for the space on Airbnb.com — an online forum for people looking to rent or rent out residential units on a short-term basis — to see if she could make some money while she was away.

What started as a one-time trial has turned into a lucrative side business.

"It started to book around New Year's," Vereb said. "When I got back, it actually kept going. People kept asking for it, so I figured, why not?"

The unit has remained booked solid through the summer, Vereb said, mostly as a romantic getaway for couples either visiting wine country to the north or escaping the metropolitan area to the south.

The short-term rental — generally considered a housing unit rented out for periods less than a month — has become a hot issue in San Francisco, where the practice is being examined by city officials as possibly being a loophole exploited by landlords to skirt strict housing laws, while adding to the city's already dire housing crunch.

In other areas, such as Lake Tahoe and Marin County's rural western expanse, these rentals are more common as vacation getaways, in the spirt of a bed and breakfast. They can be houses, apartments, or even rooms in owner-occupied homes. They can be rented for weeks at a time, but are usually treated as weekend getaways for couples or for large groups looking for a party house.

Rules considered

Marin does not have nearly the housing issues that San Francisco has, nor do short-term rentals present the same degree of conundrum.

But the short-term rental has garnered enough attention for some of the county's cities to regulate it, and others to have conversations about the practice.

While these rentals are offered throughout the county, in Southern Marin and San Rafael and Novato, they appear to be most popular in West Marin's unincorporated communities, such as Stinson Beach and Inverness.

The county, which governs Marin's unincorporated areas, has no laws regulating short-term rentals, though county officials are considering whether to implement vacation-rental regulations as part of its Local Coastal Plan, which is expected to be updated by 2015. That doesn't necessarily mean it will be regulated anytime soon, though, said Tom Lai, assistant director of the county Community Development Agency.

"We're a number of years away from an ordinance, if we conclude we want one," Lai said.

Lai said that vacation rentals can be problematic, since the tenants stay for such short periods, that they have "no vested interest in the community. It's just a party house, people go there, trash the place, and then move on. At least, that is the perception of the neighbors."

Lai said vacation rentals have become increasingly popular in West Marin in the last three years, though complaints from annoyed neighbors have been coming for the last decade.

"As you see turnover in properties in West Marin, property values increase, and then these properties are put on the vacation rental circuit because it's a good way to generate revenue," Lai said.

County's approach

The vacation rental discussion is happening — or has happened in the county's incorporated areas, as well.

Though Novato's City Council has discussed whether to regulate these rentals, the city does not have any laws in place, nor does it have any plans to make any at this point, said Novato planning manager Elizabeth Dunn.

Not regulating the practice is one of four ways vacation rentals are handled throughout the county. Some towns outlaw it, while others require property owners to apply for permits to legally rent their residential units. The other approach is to outlaw it, unless the America's Cup is happening in San Francisco Bay.

Because of the demand for vacation rentals during the world-renowned sailing event that San Francisco hosted over the last two summers, Sausalito — which has long outlawed the practice — decided to temporarily allow the rentals.

"We had established regulations to allow property owners to rent their properties out on a short-term basis," said Sausalito community development director Jeremy Graves. "That was a short-term regulation and specifically targeted for the America's Cup event."

Since October 2013, it has again been illegal to rent a residential unit in Sausalito for 30 days or less — though some Sausalito property owners due try to keep the side business going.

Graves said a recently issued violation is being contested by the property owner. What's the evidence a violation occurred? An online advertisement and complaints from the neighborhood, Graves said.

Permit process

The city's effort to bring such situations into compliance begin with a letter to the property owner or resident in violation, and it can escalate to daily $500 fines.

Tiburon allows the rentals, as long as the property owners have permits to do so. But town officials say it is likely not all short-term rentals offered in Tiburon are authorized.

"We have issued half a dozen permits," said Tiburon planning manager Dan Watrous. "There are likely more out there, but they are hard to identify."

The town has rejected just one permit application, Watrous said. It was for a six-bedroom house that had garnered the ire of neighbors for being the scene of large parties that produced lots of garbage and robbed the neighborhood of street parking. The town made the house's owner apply for a permit, then denied it, Watrous said.

The issue has even been addressed by homeowners associations. The Floating Homes Association, a waterboat community just north of Sausalito's city limits, used to be a popular spot for vacation renters, much to the chagrin of its full-time residents. So, three years ago, when the association re-wrote its lease agreements, a rule was added that states units must be rented for at least 30 days.

"All is well now," said association president Katherine Boschetto.

While short-term rentals can be a nuisance for neighbors, there are grumblings that they hurt business for the hotels and bed and breakfast inns. But that might be a problem in West Marin.

"I don't think it has adversely affected my business," said Amanda Eichstaedt, who owns the four-unit Bear Valley Inn in Olema, with her husband Ken. "There's really not enough (lodging) out here, anyway, during the busy season."

Eichstaedt said that when she receives an inquiry from a prospective tenant who does not appear to be a match for the inn, she recommends checking VRBO.com — a website that offers a service similar to Airbnb.com. (VRBO stands for "vacation rental by owner.)

"If they want to have the whole place, for a giant family, that is not ideal for a bed-and-breakfast setting," Eichstaedt said. "I don't want to have a party house."